Ottawa makes a push for eliminating economic barriers between provinces

James Moore’s plan to revive the Agreement on Internal Trade
Pier Paolo Cito/CP Photo

At a time when the federal government is forging ahead toward a landmark free trade deal with Europe, Industry Minister James Moore is trying to borrow a bit of that momentum to try to dismantle economic barriers between Canadian provinces.

Moore spoke yesterday in a conference call, which lasted about an hour, with his provincial and territorial counterparts responsible for what’s called the Agreement on Internal Trade, and proposed a push to modernize the AIT, calling for the work to begin with a face-to-face meeting of the group within 90 days.

In fact, it would be more accurate to say he spoke on the phone with only some of the provincial and territorial ministers responsible for domestic trade. Six participated. The other seven didn’t bother—a telling indication of how the AIT, created in 1994 by the Liberal government of Jean Chrétien, has faded as a force for change.

“This is just so inadequate. Something needs to be done here,” Moore said in an interview today. “I said to the group… let’s talk about revitalizing and modernizing the AIT altogether.”

As reported recently in Maclean’s, Canada-European Union trade agreement, which Prime Minister Stephen Harper announced the broad outlines of back in October, casts an unflattering light on the AIT. Under the deal, European companies are guaranteed the right not only to bid on Canadian federal government contracts, but also for a fair chance to sell goods and services to provinces or municipalities. (Canadian companies gain the same access in Europe.)

If a European firm feels it hasn’t been allowed to compete fairly against local firms anywhere in Canada, it will have access to a swift, binding dispute-settlement system. The AIT doesn’t offer anything as nearly so powerful for a Canadian company based in one province that suspects it’s been shut out of another.

The coming of the Canada-Europe deal, Moore says, makes the time right for eliminating any remaining interprovincial procurement discrimination. “Whether we have our eyes open to it or not, there’s going to have to be progress by all of our jurisdictions on the very specific and big matter of procurement,” he said.

Moore said he plans to follow up on yesterday’s conference call with a letter to provincial and territorial governments next week. He’ll propose that meeting within 90 days. In a bid to build momentum, he’ll also suggest full ministerial AIT meetings every six months, instead of only once a year, with officials meeting quarterly.

As well, he said some of the basic ways the AIT functions should be reviewed. For instance, a consensus among all provinces and the federal government must now be reached before any AIT reforms are implemented; Moore suggests a mechanism that would allow clusters of provinces that want to “move more aggressively” to do so under the AIT, without first having to win over the entire country.

Impediments between provinces can be subtle. Health and safety rules, regulations for registering corporations or recognizing professional and trade credentials, preferences for firms with “local knowledge”—critics say all these and more are sometimes employed as economic barriers.

Moore says he’ll challenge the provinces to pinpoint specific areas ripe for fast reform. “I don’t think it’s unreasonable to ask provinces to come to the table with two proposals for full, pan-Canadian market liberalization, and see what others have to say about it,” he said. “We might be surprised by what provinces are willing to put on the table.”

The push from Moore comes as industry associations grow increasingly frustrated over the apparent gap between the Canada-Europe agreement’s ambition and the moribund AIT.

“It is an embarrassment that we are able to provide greater benefits to our trading partners than to each jurisdiction within Canada,” said the Committee on Internal Trade, a group counts among its influential members the Canadian Chamber of Commerce and the Canadian Council of Chief Executives, in an open letter to Moore a few days ago. “We can no longer excuse the fact that our domestic market remains divided by unnecessary barriers and urge you to work with the provinces and territories to rectify this fact.”